IN a departure from years of sustained growth, the African private capital market experienced a downturn in 2023, reflecting global economic challenges. According to a recent report by the African Private Capital Association (AVCA), total deal volume decreased to 450 deals valued at $5.9bn, marking a 28 percent decline in deal volume and a 22 percent decline in value compared to the previous year.
The AVCA’s annual report on private capital activity in Africa revealed that while the continent’s performance remained relatively robust compared to other regions, it was not immune to the global slowdown. Despite the decline in investment activity, Africa demonstrated resilience, signalling a return to the steady growth trajectory observed before 2022.
‘Notwithstanding the global economic headwinds, Africa-focused investors continue to demonstrate their commitment to the continent, particularly in venture capital – the continent’s leading asset class,’ commented Abi Mustapha-Maduakor, CEO of AVCA.
Venture capital continued to be the preferred investment route, accounting for 68 percent of total private capital investment volume on the continent in 2023. ‘VC remained the preferred route for investors seeking to back promising African businesses with innovative tech-enabled solutions,’ noted the AVCA report.
‘Investors recognise Africa’s potential to accelerate the global transition to clean energy,’ said Mustapha-Maduakor, highlighting the surge in infrastructure investment. ‘With Africa’s abundant solar, hydro, biomass, and wind potential, investors are increasingly leveraging infrastructure projects to drive sustainable development.’
Regional patterns also experienced shifts, with Southern Africa leading in private capital investment volume and value in 2023. ‘Southern Africa attracted the highest volume and value of deals across the continent, signalling a shift from previous years,’ explained Mustapha-Maduakor.
‘Despite challenges, Africa remains an attractive investment destination,’ emphasized Mustapha-Maduakor. ‘Investors are increasingly recognizing the continent’s potential for growth and innovation.’
As the African private capital market navigates challenges and opportunities, stakeholders remain optimistic about the continent’s long-term economic prospects. With a focus on innovation, sustainability, and resilience, Africa continues to attract investment and drive growth in key sectors.
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